Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 17, 2017 | Jun. 30, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | WSO | ||
Entity Registrant Name | WATSCO INC | ||
Entity Central Index Key | 105,016 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 3,693,000,000 | ||
Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 30,362,119 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 5,243,829 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Revenues | $ 4,220,702 | [1] | $ 4,113,239 | [1] | $ 3,944,540 |
Cost of sales | 3,186,118 | 3,105,882 | 2,988,138 | ||
Gross profit | 1,034,584 | 1,007,357 | 956,402 | ||
Selling, general and administrative expenses | 688,952 | 670,609 | 650,655 | ||
Operating income | 345,632 | 336,748 | 305,747 | ||
Interest expense, net | 3,713 | 5,547 | 5,206 | ||
Income before income taxes | 341,919 | 331,201 | 300,541 | ||
Income taxes | 105,936 | 104,677 | 91,839 | ||
Net income | 235,983 | 226,524 | 208,702 | ||
Less: net income attributable to non-controlling interest | 53,173 | 53,595 | 57,315 | ||
Net income attributable to Watsco, Inc. | $ 182,810 | $ 172,929 | $ 151,387 | ||
Earnings per share for Common and Class B common stock: | |||||
Basic | $ 5.16 | [2] | $ 4.91 | [2] | $ 4.33 |
Diluted | $ 5.15 | [2] | $ 4.90 | [2] | $ 4.32 |
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions. | ||||
[2] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net income | $ 235,983 | $ 226,524 | $ 208,702 |
Other comprehensive gain (loss), net of tax | |||
Foreign currency translation adjustment | 6,211 | (39,378) | (21,117) |
Unrealized (loss) gain on cash flow hedging instruments | (965) | 2,713 | 280 |
Reclassification of loss (gain) on cash flow hedging instruments into earnings | 323 | (1,993) | |
Unrealized gain (loss) on available-for-sale securities | 14 | (8) | 1 |
Other comprehensive gain (loss) | 5,583 | (38,666) | (20,836) |
Comprehensive income | 241,566 | 187,858 | 187,866 |
Less: comprehensive income attributable to non-controlling interest | 55,382 | 38,086 | 48,752 |
Comprehensive income attributable to Watsco, Inc. | $ 186,184 | $ 149,772 | $ 139,114 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 56,010 | $ 35,229 |
Accounts receivable, net | 475,974 | 451,079 |
Inventories | 685,011 | 673,967 |
Other current assets | 23,161 | 20,990 |
Total current assets | 1,240,156 | 1,181,265 |
Property and equipment, net | 90,502 | 62,715 |
Goodwill | 379,737 | 378,310 |
Intangible assets, net | 158,564 | 160,481 |
Other assets | 5,690 | 5,671 |
Total assets | 1,874,649 | 1,788,442 |
Current liabilities: | ||
Current portion of other long-term obligations | 200 | 184 |
Accounts payable | 185,482 | 145,162 |
Accrued expenses and other current liabilities | 129,206 | 124,955 |
Total current liabilities | 314,888 | 270,301 |
Long-term obligations: | ||
Borrowings under revolving credit agreement | 235,294 | 245,300 |
Other long-term obligations, net of current portion | 348 | 514 |
Total long-term obligations | 235,642 | 245,814 |
Deferred income taxes and other liabilities | 72,371 | 68,606 |
Commitments and contingencies | ||
Watsco, Inc. shareholders' equity: | ||
Preferred stock, $0.50 par value, 10,000,000 shares authorized; no shares issued | ||
Paid-in capital | 592,350 | 602,522 |
Accumulated other comprehensive loss, net of tax | (43,530) | (46,904) |
Retained earnings | 550,482 | 495,276 |
Treasury stock, at cost, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock at both December 31, 2016 and 2015 | (114,425) | (114,425) |
Total Watsco, Inc. shareholders' equity | 1,005,828 | 957,310 |
Non-controlling interest | 245,920 | 246,411 |
Total shareholders' equity | 1,251,748 | 1,203,721 |
Total liabilities and shareholders' equity | 1,874,649 | 1,788,442 |
Common Stock | ||
Watsco, Inc. shareholders' equity: | ||
Common stock, $0.50 par value | 18,341 | 18,308 |
Class B Common Stock | ||
Watsco, Inc. shareholders' equity: | ||
Common stock, $0.50 par value | $ 2,610 | $ 2,533 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value | $ 0.50 | $ 0.50 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common Stock | ||
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares outstanding | 36,682,562 | 36,616,197 |
Treasury stock, shares | 6,322,650 | 6,322,650 |
Class B Common Stock | ||
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares outstanding | 5,218,754 | 5,066,209 |
Treasury stock, shares | 48,263 | 48,263 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock, Class B Common Stock and Preferred Stock | Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Non-controlling Interest |
Beginning balance at Dec. 31, 2013 | $ 1,127,392 | $ 20,549 | $ 606,384 | $ (11,474) | $ 339,362 | $ (114,425) | $ 286,996 |
Beginning balance (in shares) at Dec. 31, 2013 | 34,727,121 | ||||||
Net income | 208,702 | 151,387 | 57,315 | ||||
Other comprehensive gain (loss) | (20,836) | (12,273) | (8,563) | ||||
Issuances of non-vested restricted shares of common stock (in shares) | 218,725 | ||||||
Issuances of non-vested restricted shares of common stock | $ 109 | (109) | |||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (5,000) | ||||||
Forfeitures of non-vested restricted shares of common stock | $ (2) | 2 | |||||
Common stock contribution to 401(k) plan | 1,759 | $ 9 | 1,750 | ||||
Common stock contribution to 401(k) plan (in shares) | 18,309 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 73,948 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 4,666 | $ 37 | 4,629 | ||||
Retirement of common stock (in shares) | (26,482) | ||||||
Retirement of common stock | (2,615) | $ (13) | (2,602) | ||||
Share-based compensation | 12,006 | 12,006 | |||||
Excess tax benefit from share-based compensation | 1,828 | 1,828 | |||||
Cash dividends declared and paid on Common and Class B common stock | (69,870) | (69,870) | |||||
Decrease in non-controlling interest in Carrier Enterprise I | (87,735) | (43,324) | (44,411) | ||||
Distributions to non-controlling interest | (43,258) | (43,258) | |||||
Ending balance at Dec. 31, 2014 | 1,132,039 | $ 20,689 | 580,564 | (23,747) | 420,879 | (114,425) | 248,079 |
Ending balance (in shares) at Dec. 31, 2014 | 35,006,621 | ||||||
Net income | 226,524 | 172,929 | 53,595 | ||||
Other comprehensive gain (loss) | (38,666) | (23,157) | (15,509) | ||||
Issuances of non-vested restricted shares of common stock (in shares) | 200,479 | ||||||
Issuances of non-vested restricted shares of common stock | $ 100 | (100) | |||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (5,000) | ||||||
Forfeitures of non-vested restricted shares of common stock | $ (2) | 2 | |||||
Common stock contribution to 401(k) plan | 1,963 | $ 9 | 1,954 | ||||
Common stock contribution to 401(k) plan (in shares) | 18,343 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 124,262 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 8,632 | $ 62 | 8,570 | ||||
Retirement of common stock (in shares) | (33,212) | ||||||
Retirement of common stock | (4,140) | $ (17) | (4,123) | ||||
Share-based compensation | 13,233 | 13,233 | |||||
Excess tax benefit from share-based compensation | 2,422 | 2,422 | |||||
Cash dividends declared and paid on Common and Class B common stock | (98,532) | (98,532) | |||||
Distributions to non-controlling interest | (39,754) | (39,754) | |||||
Ending balance at Dec. 31, 2015 | 1,203,721 | $ 20,841 | 602,522 | (46,904) | 495,276 | (114,425) | 246,411 |
Ending balance (in shares) at Dec. 31, 2015 | 35,311,493 | ||||||
Net income | 235,983 | 182,810 | 53,173 | ||||
Other comprehensive gain (loss) | 5,583 | 3,374 | 2,209 | ||||
Issuances of non-vested restricted shares of common stock (in shares) | 183,144 | ||||||
Issuances of non-vested restricted shares of common stock | $ 92 | (92) | |||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (26,000) | ||||||
Forfeitures of non-vested restricted shares of common stock | $ (13) | 13 | |||||
Common stock contribution to 401(k) plan | 2,348 | $ 10 | 2,338 | ||||
Common stock contribution to 401(k) plan (in shares) | 20,045 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 72,482 | ||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 5,696 | $ 36 | 5,660 | ||||
Retirement of common stock (in shares) | (30,761) | ||||||
Retirement of common stock | (4,018) | $ (15) | (4,003) | ||||
Share-based compensation | 11,848 | 11,848 | |||||
Cash dividends declared and paid on Common and Class B common stock | (127,604) | (127,604) | |||||
Decrease in non-controlling interest in Carrier Enterprise I | (42,909) | (25,936) | (16,973) | ||||
Distributions to non-controlling interest | (38,900) | (38,900) | |||||
Ending balance at Dec. 31, 2016 | $ 1,251,748 | $ 20,951 | $ 592,350 | $ (43,530) | $ 550,482 | $ (114,425) | $ 245,920 |
Ending balance (in shares) at Dec. 31, 2016 | 35,530,403 |
Consolidated Statements of Sha7
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash dividends declared and paid, common stock | $ 3.60 | $ 2.80 | $ 2 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 235,983 | $ 226,524 | $ 208,702 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 20,066 | 19,117 | 17,927 |
Share-based compensation | 12,319 | 12,596 | 11,473 |
Deferred income tax provision | 2,720 | 4,687 | 289 |
Provision for doubtful accounts | 3,487 | 2,688 | 2,609 |
Non-cash contribution to 401(k) plan | 2,348 | 1,963 | 1,759 |
Gain on sale of property and equipment | (189) | (487) | (1,292) |
Excess tax benefits from share-based compensation | (2,422) | (1,828) | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (26,941) | (26,121) | (41,068) |
Inventories | (9,729) | (3,652) | (98,741) |
Accounts payable and other liabilities | 39,759 | (13,225) | 45,242 |
Other, net | (2,067) | (285) | (92) |
Net cash provided by operating activities | 277,756 | 221,383 | 144,980 |
Cash flows from investing activities: | |||
Capital expenditures | (43,577) | (23,698) | (21,512) |
Proceeds from sale of property and equipment | 744 | 760 | 2,388 |
Net cash used in investing activities | (42,833) | (22,938) | (19,124) |
Cash flows from financing activities: | |||
Dividends on Common and Class B common stock | (127,604) | (98,532) | (69,870) |
Purchase of additional ownership from non-controlling interest | (42,909) | (87,735) | |
Distributions to non-controlling interest | (38,900) | (39,754) | (43,258) |
Net (repayments) proceeds under revolving credit agreement | (10,006) | (56,256) | 74,729 |
Net (repayments) proceeds from other long-term obligations | (150) | (157) | 235 |
Payment of fees related to revolving credit agreement | (381) | ||
Excess tax benefits from share-based compensation | 2,422 | 1,828 | |
Net proceeds from issuances of common stock | 5,653 | 5,957 | 4,245 |
Net cash used in financing activities | (213,916) | (186,320) | (120,207) |
Effect of foreign exchange rate changes on cash and cash equivalents | (226) | (1,343) | (680) |
Net increase in cash and cash equivalents | 20,781 | 10,782 | 4,969 |
Cash and cash equivalents at beginning of year | 35,229 | 24,447 | 19,478 |
Cash and cash equivalents at end of year | $ 56,010 | $ 35,229 | $ 24,447 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization, Consolidation and Presentation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At December 31, 2016, we operated from 565 locations in 37 U.S. states, Canada, Mexico and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean. The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. Foreign Currency Translation and Transactions The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income. Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to self-insurance programs and the valuation of goodwill and indefinite lived intangible assets. While we believe that these estimates are reasonable, actual results could differ from such estimates. Cash Equivalents All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2016 and 2015, the allowance for doubtful accounts totaled $6,169 and $5,305, respectively. Inventories Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost or market using a weighted-average cost basis and the first-in, first-out Vendor Rebates We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2016 and 2015, we had $9,926 and $8,086, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year. Marketable Securities Investments in marketable equity securities are classified as available-for-sale Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from 3-40 5-7 3-10 Goodwill and Other Intangible Assets Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. Other intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and non-compete We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests. Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2016, there were no such events or circumstances. Fair Value Measurements We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy: Level 1 Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. Revenue Recognition Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment and related parts and supplies and is recorded when shipment of products or delivery of services has occurred. Substantially all customer returns relate to products that are returned under warranty obligations underwritten by manufacturers, effectively mitigating our risk of loss for customer returns. Taxes collected from our customers and remitted to governmental authorities are presented in our consolidated statements of income on a net basis. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2016, 2015 and 2014, were $22,242, $21,150 and $19,754, respectively. Shipping and Handling Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products is included in selling, general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $42,809, $41,345 and $43,324, respectively. Share-Based Compensation The fair value of stock option and non-vested paid-in Income Taxes We record United States federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated United States federal income tax return. As income tax returns are generally not filed until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” Earnings per Share We compute earnings per share using the two-class two-class non-vested non-forfeitable two-class two-class Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period. Derivative Instruments and Hedging Activity We have used derivative instruments, including forward contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following: No Hedging Designation. Cash Flow Hedge. Fair Value Hedge. See Note 13 for additional information pertaining to derivative instruments. New Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a standard on revenue recognition that provides a single, comprehensive revenue recognition model for all contracts with customers. The standard is principle-based and provides a five-step model to determine the measurement of revenue and timing of when it is recognized. This standard will be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption, which requires additional footnote disclosures. This standard is effective for our interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We will adopt this guidance on January 1, 2018. While we are currently evaluating the method of adoption and the impact of the provisions of this standard, we expect similar performance obligations to result under this guidance as compared with deliverables and separate units of accounting currently identified. As a result, we expect the timing of our revenue recognition to generally remain the same. Presentation of Debt Issuance Costs In April 2015, the FASB issued guidance that will require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, rather than as an asset. This guidance is effective retrospectively for interim and annual reporting periods beginning after December 15, 2015. The adoption of this guidance did not have an impact on our consolidated financial statements. Measurement of Inventory In July 2015, the FASB issued guidance that simplifies the measurement of inventory by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies to all inventory that is measured using first-in, first-out Classification of Deferred Taxes In November 2015, the FASB issued guidance that requires deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. This guidance can be applied either prospectively or retrospectively and will be effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact to our consolidated balance sheets. Leases In February 2016, the FASB issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. This guidance will be applied using a modified retrospective approach and is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. We will adopt this guidance on January 1, 2019. While we are still evaluating the impact of adopting this guidance on our consolidated financial statements, including the option to elect certain practical expedients, we expect that upon adoption the right-of-use Share-Based Payments In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The guidance requires that all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. The guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The guidance increases the amount companies can withhold to cover income taxes on awards without triggering liability classification for shares used to satisfy statutory income tax withholding obligations and requires application of a modified retrospective transition method. The amended guidance will be effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted if all provisions are adopted in the same period. We elected to early adopt the amended guidance during the quarter ended June 30, 2016, which required us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in Adoption of the amended guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in Quarter Ended March 31, 2016 As Reported As Adjusted Income Statement: Income taxes $ 15,508 $ 14,654 Net income $ 34,174 $ 35,028 Diluted earnings per share $ 0.71 $ 0.74 Diluted weighted-average common shares outstanding 32,537,225 32,546,314 Balance Sheet: Paid-in $ 610,285 $ 609,431 Cash Flow Statement: Net cash provided by operating activities $ 41,852 $ 42,706 Net cash used in financing activities $ (41,638 ) $ (42,492 ) |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | 2. EARNINGS PER SHARE The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Years Ended December 31, 2016 2015 2014 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 182,810 $ 172,929 $ 151,387 Less: distributed and undistributed earnings allocated to non-vested 14,806 13,634 11,444 Earnings allocated to Watsco, Inc. shareholders $ 168,004 $ 159,295 $ 139,943 Weighted-average common shares outstanding - Basic 32,582,385 32,435,961 32,308,073 Basic earnings per share for Common and Class B common stock $ 5.16 $ 4.91 $ 4.33 Allocation of earnings for Basic: Common stock $ 154,021 $ 146,037 $ 128,214 Class B common stock 13,983 13,258 11,729 $ 168,004 $ 159,295 $ 139,943 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 182,810 $ 172,929 $ 151,387 Less: distributed and undistributed earnings allocated to non-vested 14,801 13,626 11,435 Earnings allocated to Watsco, Inc. shareholders $ 168,009 $ 159,303 $ 139,952 Weighted-average common shares outstanding - Basic 32,582,385 32,435,961 32,308,073 Effect of dilutive stock options 34,119 44,395 50,781 Weighted-average common shares outstanding - Diluted 32,616,504 32,480,356 32,358,854 Diluted earnings per share for Common and Class B common stock $ 5.15 $ 4.90 $ 4.32 Diluted earnings per share for our Common stock assumes the conversion of all of our Class B common stock into Common stock as of the beginning of the fiscal year; therefore, no allocation of earnings to Class B common stock is required. At December 31, 2016, 2015 and 2014, our outstanding Class B common stock was convertible into 2,711,811, 2,699,710 and 2,707,725 shares of our Common stock, respectively. Diluted earnings per share excluded 31,839, 67,014 and 9,984 shares for the years ended December 31, 2016, 2015 and 2014, respectively, related to stock options with an exercise price per share greater than the average market value, resulting in an anti-dilutive effect on diluted earnings per share. |
OTHER COMPREHENSIVE GAIN (LOSS)
OTHER COMPREHENSIVE GAIN (LOSS) | 12 Months Ended |
Dec. 31, 2016 | |
OTHER COMPREHENSIVE GAIN (LOSS) | 3. OTHER COMPREHENSIVE GAIN (LOSS) Other comprehensive gain (loss) consists of the foreign currency translation adjustment associated with our Canadian operations’ use of the Canadian dollar as its functional currency and changes in the unrealized gains (losses) on cash flow hedging instruments and available-for-sale Years Ended December 31, 2016 2015 2014 Foreign currency translation adjustment $ 6,211 $ (39,378 ) $ (21,117 ) Unrealized (loss) gain on cash flow hedging instruments (1,321 ) 3,716 384 Income tax benefit (expense) 356 (1,003 ) (104 ) Unrealized (loss) gain on cash flow hedging instruments, net of tax (965 ) 2,713 280 Reclassification of loss (gain) on cash flow hedging instruments into earnings 442 (2,730 ) — Income tax (benefit) expense (119 ) 737 — Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax 323 (1,993 ) — Unrealized gain (loss) on available-for-sale 27 (12 ) 1 Income tax (expense) benefit (13 ) 4 — Unrealized gain (loss) on available-for-sale 14 (8 ) 1 Other comprehensive gain (loss) $ 5,583 $ (38,666 ) $ (20,836 ) The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Years Ended December 31, 2016 2015 2014 Foreign currency translation adjustment: Beginning balance $ (47,204 ) $ (23,623 ) $ (11,181 ) Current period other comprehensive gain (loss) 3,745 (23,581 ) (12,442 ) Ending balance (43,459 ) (47,204 ) (23,623 ) Cash flow hedging instruments: Beginning balance 600 168 — Current period other comprehensive (loss) income (579 ) 1,628 168 Less reclassification adjustment 194 (1,196 ) — Ending balance 215 600 168 Available-for-sale Beginning balance (300 ) (292 ) (293 ) Current period other comprehensive income (loss) 14 (8 ) 1 Ending balance (286 ) (300 ) (292 ) Accumulated other comprehensive loss, net of tax $ (43,530 ) $ (46,904 ) $ (23,747 ) |
SUPPLIER CONCENTRATION
SUPPLIER CONCENTRATION | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLIER CONCENTRATION | 4. SUPPLIER CONCENTRATION Purchases from our top ten suppliers comprised 85%, 84% and 82% of all purchases made in 2016, 2015 and 2014, respectively. Our largest supplier, Carrier and its affiliates, accounted for 62%, 62% and 61% of all purchases made in 2016, 2015 and 2014, respectively. See Note 16. A significant interruption by Carrier, or any of our other key suppliers, in the delivery of products could impair our ability to maintain current inventory levels and could materially impact our consolidated results of operations and consolidated financial position. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment, net, consists of: December 31, 2016 2015 Land $ 820 $ 820 Buildings and improvements 71,082 69,675 Machinery, vehicles and equipment 74,640 43,150 Furniture and fixtures 15,090 14,311 Computer hardware and software 42,515 38,876 204,147 166,832 Accumulated depreciation and amortization (113,645 ) (104,117 ) $ 90,502 $ 62,715 Depreciation and amortization expense related to property and equipment included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $14,853, $13,802 and $12,158, respectively. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
DEBT | 6. DEBT We maintain an unsecured, syndicated revolving credit agreement that provides for borrowings of up to $600,000. Borrowings are used to fund seasonal working capital needs and for other general corporate purposes, including acquisitions, dividends (if and as declared by our Board of Directors), capital expenditures, stock repurchases and issuances of letters of credit. The credit agreement matures on July 1, 2019. Included in the credit facility are a $90,000 swingline subfacility, a letter of credit subfacility and a $75,000 multicurrency borrowing sublimit. On January 24, 2017, we entered into an amendment to this credit agreement, which reduced the letter of credit subfacility from $50,000 to $10,000 and modified certain definitions. Borrowings under the credit facility bear interest at either LIBOR-based rates plus a spread, which ranges from 87.5 to 250.0 basis-points (LIBOR plus 100.0 basis-points at December 31, 2016), depending on our ratio of total debt to EBITDA, or on rates based on the higher of the Prime rate or the Federal Funds Rate, in each case plus a spread which ranges from 0 to 150.0 basis-points (0 basis-points at December 31, 2016), depending on our ratio of total debt to EBITDA. We pay a variable commitment fee on the unused portion of the commitment under the revolving credit agreement, ranging from 12.5 to 35.0 basis-points (15.0 basis-points at December 31, 2016). At December 31, 2016 and 2015, $235,294 and $245,300, respectively, were outstanding under the revolving credit agreement. The revolving credit agreement contains customary affirmative and negative covenants, including financial covenants with respect to consolidated leverage and interest coverage ratios, and other customary restrictions. We believe we were in compliance with all covenants at December 31, 2016. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | 7. INCOME TAXES The components of income tax expense from our wholly-owned operations and investments and our controlling interest in joint ventures with Carrier are as follows: Years Ended December 31, 2016 2015 2014 U.S. Federal $ 86,719 $ 85,585 $ 74,561 State 9,801 9,431 10,325 Foreign 9,416 9,661 6,953 $ 105,936 $ 104,677 $ 91,839 Current $ 103,216 $ 99,990 $ 91,550 Deferred 2,720 4,687 289 $ 105,936 $ 104,677 $ 91,839 We calculate our income tax expense and our effective tax rate for 100% of income attributable to our wholly-owned operations and for our controlling interest of income attributable to our joint ventures with Carrier, which are primarily taxed as partnerships for income tax purposes. Following is a reconciliation of the effective income tax rate: Years Ended December 31, 2016 2015 2014 U.S. federal statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit and other 2.1 2.3 3.0 Excess tax benefits from share-based compensation (1.0 ) — — Tax effects on foreign income (0.1 ) (0.3 ) (1.0 ) Effective income tax rate attributable to Watsco, Inc. 36.0 37.0 37.0 Taxes attributable to non-controlling (5.0 ) (5.4 ) (6.4 ) Effective income tax rate 31.0 % 31.6 % 30.6 % The following is a summary of the significant components of our current and long-term deferred tax assets and liabilities: December 31, 2016 2015 Current deferred tax assets: Capitalized inventory costs and inventory reserves $ 2,301 $ 1,794 Allowance for doubtful accounts 1,379 1,053 Self-insurance reserves 500 519 Other current deferred tax assets 1,778 1,921 Total current deferred tax assets (1) 5,958 5,287 Long-term deferred tax assets: Share-based compensation 26,239 23,603 Other long-term deferred tax assets 449 352 Net operating loss carryforwards 209 207 26,897 24,162 Valuation allowance — — Total long-term deferred tax assets (2) 26,897 24,162 Current deferred tax liabilities: Other current deferred tax liabilities (473 ) (686 ) Total current deferred tax liabilities (1) (473 ) (686 ) Long-term deferred tax liabilities: Deductible goodwill (88,581 ) (83,868 ) Depreciation (5,883 ) (3,774 ) Other long-term deferred tax liabilities (1,160 ) (1,533 ) Total long-term deferred tax liabilities (2) (95,624 ) (89,175 ) Net deferred tax liabilities $ (63,242 ) $ (60,412 ) (1) Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets. (2) Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. Amounts earned by foreign subsidiaries are generally subject to United States income taxation upon repatriation. United States income taxes have not been provided on undistributed earnings of our foreign subsidiaries. The cumulative undistributed earnings related to foreign operations were approximately $130,000 at December 31, 2016. It is not practicable to estimate the amount of tax that might be payable. Our intention is to indefinitely reinvest these earnings outside of the United States or to repatriate the earnings only when it is tax effective to do so. Management has determined that no valuation allowance was necessary at both December 31, 2016 and 2015. At December 31, 2016, there were state and other net operating loss carryforwards of $6,872, which expire in varying amounts from 2017 through 2036. These amounts are available to offset future taxable income. There were no federal net operating loss carryforwards at December 31, 2016. We are subject to United States federal income tax, income tax of multiple state jurisdictions and foreign income tax. We are subject to tax audits in the various jurisdictions until the respective statutes of limitations expire. We are no longer subject to United States federal tax examinations for tax years prior to 2013. For the majority of states, we are no longer subject to tax examinations for tax years prior to 2012. As of December 31, 2016 and 2015, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $3,695 and $3,513, respectively. Of these totals, $2,573 and $2,416, respectively, (net of the federal benefit received from state positions) represent the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate. Our continuing practice is to recognize penalties within selling, general and administrative expenses and interest related to income tax matters in income tax expense in the consolidated statements of income. As of December 31, 2016 and 2015, the cumulative amount of estimated accrued interest and penalties resulting from such unrecognized tax benefits was $414 and $384, respectively, and is included in deferred income taxes and other liabilities in the accompanying consolidated balance sheets. The changes in gross unrecognized tax benefits are as follows: Balance at December 31, 2013 $ 3,135 Additions based on tax positions related to the current year 751 Reductions due to lapse of applicable statute of limitations (167 ) Balance at December 31, 2014 3,719 Additions based on tax positions related to the current year 871 Reductions due to lapse of applicable statute of limitations and tax assessments (1,077 ) Balance at December 31, 2015 3,513 Additions based on tax positions related to the current year 547 Reductions due to lapse of applicable statute of limitations (365 ) Balance at December 31, 2016 $ 3,695 |
SHARE-BASED COMPENSATION AND BE
SHARE-BASED COMPENSATION AND BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
SHARE-BASED COMPENSATION AND BENEFIT PLANS | 8. SHARE-BASED COMPENSATION AND BENEFIT PLANS Share-Based Compensation Plans We maintain the 2014 Incentive Compensation Plan (the “2014 Plan”) that provides for the award of a broad variety of share-based compensation alternatives such as non-vested non-qualified non-qualified non-vested Under the 2014 Plan, the number of shares of Common and Class B common stock available for issuance is (i) 2,000,000, plus (ii) 45,421 shares of Common stock or Class B common stock that remained available for grant in connection with awards under the Watsco, Inc. Amended and Restated 2001 Incentive Compensation Plan (the “2001 Plan”) as of the date our shareholders approved the 2014 Plan plus (iii) shares underlying currently outstanding awards issued under the 2001 Plan, which shares become reissuable under the 2014 Plan to the extent that such underlying shares are not issued due to their forfeiture, expiration, termination or otherwise. A total of 293,950 shares of Common stock, net of cancellations, and 326,623 shares of Class B common stock, had been awarded under the 2014 Plan as of December 31, 2016. As of December 31, 2016, 1,424,848 shares of common stock were reserved for future grants under the 2014 Plan. Options under the 2014 Plan vest over two to four years of service and have contractual terms of five years. Awards of non-vested The 2001 Plan expired during 2014; therefore, no additional options may be granted. There were 37,750 options to exercise common stock outstanding under the 2001 Plan at December 31, 2016. Options under the 2001 Plan vest over two to four years of service and have contractual terms of five years. The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2016: Options Weighted- Weighted- (in years) Aggregate Options outstanding at December 31, 2015 257,334 $ 102.96 Granted 107,000 140.41 Exercised (63,084 ) 71.18 Forfeited (7,000 ) 127.56 Options outstanding at December 31, 2016 294,250 $ 122.80 3.56 $ 7,451 Options exercisable at December 31, 2016 24,419 $ 109.81 2.92 $ 935 The following is a summary of non-vested Shares Weighted- Non-vested 2,819,196 $ 49.99 Granted 183,144 130.01 Vested (77,450 ) 63.26 Forfeited (26,000 ) 112.79 Non-vested 2,898,890 $ 54.13 The weighted-average grant date fair value of non-vested non-vested During 2016, 30,413 shares of Common and Class B common stock with an aggregate fair market value of $3,967 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2015, 7,206 shares of Common stock with an aggregate fair market value of $889 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2014, 21,028 shares of Common stock with an aggregate fair market value of $2,125 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. These shares were retired upon delivery. Share-Based Compensation Fair Value Assumptions The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing valuation model based on the weighted-average assumptions noted in the table below. The fair value of each stock option award, which is subject to graded vesting, is expensed, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the stock option. We use historical data to estimate stock option forfeitures. The expected term of stock option awards granted represents the period of time that stock option awards granted are expected to be outstanding and was calculated using the simplified method for plain vanilla options, which we believe provides a reasonable estimate of expected life based on our historical data. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon The following table presents the weighted-average assumptions used for stock options granted: Years Ended December 31, 2016 2015 2014 Expected term in years 4.25 4.25 4.25 Risk-free interest rate 1.24 % 1.25 % 1.35 % Expected volatility 18.65 % 20.96 % 22.07 % Expected dividend yield 2.54 % 2.29 % 1.69 % Grant date fair value $ 16.37 $ 17.17 $ 15.75 Exercise of Stock Options The total intrinsic value of stock options exercised during 2016, 2015 and 2014 was $4,490, $7,525 and $3,746, respectively. Cash received from the exercise of stock options during 2016, 2015 and 2014 was $4,447, $4,850 and $3,324, respectively. During 2016, 2015 and 2014, 348 shares of Common stock with an aggregate fair market value of $51, 26,006 shares of Class B common stock with an aggregate fair market value of $3,251 and 5,454 shares of Class B common stock with an aggregate fair market value of $490, respectively, were withheld as payment in lieu of cash for stock option exercises and related tax withholdings. These shares were retired upon delivery. Share-Based Compensation Expense The following table provides information on share-based compensation expense: Years Ended December 31, 2016 2015 2014 Stock options $ 1,149 $ 952 $ 801 Non-vested 11,170 11,644 10,672 Share-based compensation expense $ 12,319 $ 12,596 $ 11,473 At December 31, 2016, there was $2,096 of unrecognized pre-tax At December 31, 2016, there was $100,397 of unrecognized pre-tax non-vested non-vested non-vested Employee Stock Purchase Plan The Watsco, Inc. Fourth Amended and Restated 1996 Qualified Employee Stock Purchase Plan (the “ESPP”) provides for up to 1,500,000 shares of Common stock to be available for purchase by our full-time employees with at least 90 days of service. The ESPP allows participating employees to purchase shares of Common stock at a 5% discount to the fair market value at specified times. During 2016, 2015 and 2014, employees purchased 5,956, 6,463 and 6,995 shares of Common stock at an average price of $125.84, $112.53 and $90.89 per share, respectively. Cash dividends received by the ESPP were reinvested in Common stock and resulted in the issuance of 3,442, 3,183 and 2,953 additional shares during 2016, 2015 and 2014, respectively. We received net proceeds of $1,206, $1,107 and $921, respectively, during 2016, 2015 and 2014, for shares of our Common stock purchased under the ESPP. At December 31, 2016, 496,160 shares remained available for purchase under the ESPP. 401(k) Plan We have a profit sharing retirement plan for our employees that is qualified under Section 401(k) of the Internal Revenue Code. Annual matching contributions are made based on a percentage of eligible employee compensation deferrals. The contribution has historically been made with the issuance of Common stock to the plan on behalf of our employees. For the years ended December 31, 2016, 2015 and 2014, we issued 20,045, 18,343 and 18,309 shares of Common stock, respectively, to the plan, representing the Common stock discretionary matching contribution of $2,348, $1,963 and $1,759, respectively. |
PURCHASE OF ADDITIONAL OWNERSHI
PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES | 12 Months Ended |
Dec. 31, 2016 | |
PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES | 9. PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES On November 29, 2016, we purchased an additional 10% ownership interest in Carrier Enterprise (“Carrier Enterprise II”) for cash consideration of $42,909, and, on February 13, 2017, we purchased an additional 10% ownership interest in Carrier Enterprise II for cash consideration of $42,688, following which we have an 80% controlling interest in Carrier Enterprise II. On July 1, 2014, we exercised our second option to acquire an additional 10% ownership interest in Carrier Enterprise, LLC (“Carrier Enterprise I”) for cash consideration of $87,735, following which we have an 80% controlling interest in Carrier Enterprise I. Neither we nor Carrier has any remaining options to purchase additional ownership interests in Carrier Enterprise I. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 10. GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill are as follows: Balance at December 31, 2014 $ 387,311 Foreign currency translation adjustment (9,001 ) Balance at December 31, 2015 378,310 Foreign currency translation adjustment 1,427 Balance at December 31, 2016 $ 379,737 Other intangible assets are comprised of the following: December 31, Estimated Useful Lives 2016 2015 Indefinite lived intangible assets - Trade names, trademarks and distribution rights $ 120,288 $ 118,205 Finite lived intangible assets: Customer relationships 10-15 years 70,194 68,981 Trade name 10 years 1,150 1,150 Non-compete 7 years 369 369 Accumulated amortization (33,437 ) (28,224 ) Finite lived intangible assets, net 38,276 42,276 $ 158,564 $ 160,481 Amortization expense related to finite lived intangible assets included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $5,213, $5,315 and $5,769, respectively. Amortization of finite lived intangible assets for 2017 through 2020 is expected to be approximately $5,200 per year and in 2021 is expected to be approximately $4,300. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
SHAREHOLDERS' EQUITY | 11. SHAREHOLDERS’ EQUITY Common Stock Common stock and Class B common stock share equally in earnings and are identical in most other respects except (i) Common stock is entitled to one vote on most matters and each share of Class B common stock is entitled to ten votes; (ii) shareholders of Common stock are entitled to elect 25% of the Board of Directors (rounded up to the nearest whole number) and Class B shareholders are entitled to elect the balance of the Board of Directors; (iii) cash dividends may be paid on Common stock without paying a cash dividend on Class B common stock and no cash dividend may be paid on Class B common stock unless at least an equal cash dividend is paid on Common stock and (iv) Class B common stock is convertible at any time into Common stock on a one-for-one Preferred Stock We are authorized to issue preferred stock with such designation, rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common stock and Class B common stock and, in certain instances, could adversely affect the market price of this stock. We had no preferred stock outstanding at December 31, 2016 or 2015. Stock Repurchase Plan In September 1999, our Board of Directors authorized the repurchase, at management’s discretion, of up to 7,500,000 shares of common stock in the open market or via private transactions. Shares repurchased under the program are accounted for using the cost method and result in a reduction of shareholders’ equity. No shares were repurchased during 2016, 2015 or 2014. In aggregate, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock have been repurchased at a cost of $114,425 since the inception of the program. At December 31, 2016, there were 1,129,087 shares remaining authorized for repurchase under the program. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FINANCIAL INSTRUMENTS | 12. FINANCIAL INSTRUMENTS Recorded Financial Instruments Recorded financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term obligations, borrowings under our revolving credit agreement and debt instruments included in other long-term obligations. At December 31, 2016 and 2015, the fair values of cash and cash equivalents, accounts receivable, accounts payable and the current portion of long-term obligations approximated their carrying values due to the short-term nature of these instruments. The fair values of variable rate borrowings under our revolving credit agreement and debt instruments included in long-term obligations also approximate their carrying value based upon interest rates available for similar instruments with consistent terms and remaining maturities. Off-Balance At December 31, 2016 and 2015, we were contingently liable under standby letters of credit aggregating $2,430 and $2,690, respectively, which are primarily used as collateral to cover any contingency related to additional risk assessments pertaining to our self-insurance programs. Additionally, at December 31, 2016 and 2015, we were contingently liable under various performance bonds aggregating approximately $8,000 and $4,000, respectively, which are used as collateral to cover any contingencies related to our nonperformance under agreements with certain customers. We do not expect that any material losses or obligations will result from the issuance of the standby letters of credit or performance bonds because we expect to meet our obligations under our self-insurance programs and to certain customers in the ordinary course of business. Accordingly, the estimated fair value of these instruments is zero. Concentrations of Credit Risk Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable. Concentrations of credit risk are limited due to the large number of customers comprising the customer base and their dispersion across many different geographical regions. We also have access to credit insurance programs which are used as an additional means to mitigate credit risk. |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2016 | |
DERIVATIVES | 13. DERIVATIVES We enter into foreign currency forward contracts to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies. Cash Flow Hedging Instruments We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occur. The maximum period for which we hedge our cash flow using these instruments is 12 months. Accordingly, at December 31, 2016, all of our open foreign currency forward contracts had maturities of one year or less. The total notional value of our foreign currency exchange contracts designated as cash flow hedges at December 31, 2016 was $33,200, and such contracts have varying terms expiring through September 2017. The impact from foreign exchange derivative instruments designated as cash flow hedges were as follows: Years Ended December 31, 2016 2015 (Loss) gain recorded in accumulated other comprehensive loss $ (1,321 ) $ 3,716 Loss (gain) reclassified from accumulated other comprehensive loss into earnings $ 442 $ (2,730 ) At December 31, 2016, we expected an estimated $490 pre-tax Derivatives Not Designated as Hedging Instruments We have also entered into foreign currency forward contracts that are either not designated as hedges or did not qualify for hedge accounting. These derivative instruments were effective economic hedges for all of the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at December 31, 2016 was $4,650, and such contracts have varying terms expiring through March 2017. We recognized (losses) gains of $(306), $2,552 and $142 from foreign currency forward contracts not designated as hedging instruments in our consolidated statements of income for 2016, 2015 and 2014, respectively. The following table summarizes the fair value of derivative instruments, which consist solely of foreign currency forward contracts, included in other current assets and accrued expenses and other current liabilities in our consolidated balance sheets. See Note 14. Asset Derivatives Liability Derivatives December 31, 2016 2015 2016 2015 Derivatives designated as hedging instruments $ 227 $ 923 $ 35 $ 3 Derivatives not designated as hedging instruments 14 326 4 4 Total derivative instruments $ 241 $ 1,249 $ 39 $ 7 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | 14. FAIR VALUE MEASUREMENTS The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Available-for-sale Other assets $ 281 $ 281 — — Derivative financial instruments Other current assets $ 241 — $ 241 — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 39 — $ 39 — Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Available-for-sale Other assets $ 254 $ 254 — — Derivative financial instruments Other current assets $ 1,249 — $ 1,249 — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 7 — $ 7 — The following is a description of the valuation techniques used for these assets and liabilities, as well as the level of input used to measure fair value: Available-for-sale securities Derivative financial instruments There were no transfers in or out of Level 1 and Level 2 during 2016 or 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Litigation, Claims and Assessments In December 2015, a purported Watsco shareholder, Nelson Gaskins, filed a derivative lawsuit in the U.S. District Court for the Southern District of Florida against Watsco’s Board of Directors. The Company is a nominal defendant. The lawsuit alleges breach of fiduciary duties regarding CEO incentive compensation and seeks to recover alleged excessive incentive compensation and unspecified damages. The defendants believe the claims are entirely without merit and intend to vigorously defend against them. We believe the ultimate outcome of this matter will not have a material adverse effect on our consolidated results of operations and consolidated financial position. We are involved in litigation incidental to the operation of our business. We vigorously defend all matters in which we or our subsidiaries are named defendants and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect us. Although the adequacy of existing insurance coverage and the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, we do not believe the ultimate liability associated with any known claims or litigation will have a material adverse effect on our financial condition or results of operations. Self-Insurance Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. Management reviews its assumptions with its independent third-party actuaries to evaluate whether the self-insurance reserves are adequate. If actual claims or adverse development of loss reserves occur and exceed these estimates, additional reserves may be required. Reserves in the amounts of $2,951 and $3,214 at December 31, 2016 and 2015, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our consolidated balance sheets. Variable Interest Entity As of December 31, 2016, in conjunction with our casualty insurance programs, limited equity interests are held in a captive insurance entity. The programs permit us to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance and to limit risk of loss in any particular year. The entity meets the definition of Variable Interest Entity (“VIE”); however, we do not meet the requirements to include this entity in the consolidated financial statements. The maximum exposure to loss related to our involvement with this entity is limited to approximately $4,300. See “Self-Insurance” above for further information on commitments associated with the insurance programs and Note 12, under the caption “Off-Balance Operating Leases We are obligated under various non-cancelable At December 31, 2016, future minimum payments under non-cancelable 2017 $ 56,639 2018 48,420 2019 35,926 2020 21,650 2021 13,184 Thereafter 13,362 Total minimum payments $ 189,181 Rental expense for the years ended December 31, 2016, 2015 and 2014, was $83,260, $82,581 and $81,155, respectively. Purchase Obligations At December 31, 2016, we were obligated under various non-cancelable |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS Purchases from Carrier and its affiliates comprised 62%, 62% and 61% of all inventory purchases made during 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, approximately $63,000 and $85,000, respectively, was payable to Carrier and its affiliates, net of receivables. Our joint ventures with Carrier also sell HVAC products to Carrier and its affiliates. Revenues in our consolidated statements of income for 2016, 2015 and 2014 included approximately $56,000, $62,000 and $38,000, respectively, of sales to Carrier and its affiliates. We believe these transactions are conducted on terms equivalent to an arm’s-length A member of our Board of Directors is the Chairman and Chief Executive Officer of Moss & Associates LLC (“Moss & Associates”), which serves as our general contractor for the remodeling of our corporate headquarters and receives customary payments for these services. Moss & Associates was paid $291 for services performed during 2016 and $109 was payable at December 31, 2016. |
INFORMATION ABOUT GEOGRAPHIC AR
INFORMATION ABOUT GEOGRAPHIC AREAS | 12 Months Ended |
Dec. 31, 2016 | |
INFORMATION ABOUT GEOGRAPHIC AREAS | 17. INFORMATION ABOUT GEOGRAPHIC AREAS Our operations are primarily within the United States, including Puerto Rico, Canada and Mexico. Products are also sold from the United States on an export-only basis to portions of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographical area: Years Ended December 31, 2016 2015 2014 Revenues: United States $ 3,813,204 $ 3,710,977 $ 3,525,176 Canada 267,220 263,908 300,289 Mexico 140,278 138,354 119,075 Total revenues $ 4,220,702 $ 4,113,239 $ 3,944,540 December 31, 2016 2015 Long-Lived Assets: United States $ 467,728 $ 441,656 Canada 155,758 154,437 Mexico 5,317 5,413 Total long-lived assets $ 628,803 $ 601,506 Revenues are attributed to countries based on the location of the store from which the sale occurred. Long-lived assets consist of property and equipment, goodwill and intangible assets. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL CASH FLOW INFORMATION | 18. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information was as follows: Years Ended December 31, 2016 2015 2014 Interest paid $ 3,362 $ 4,993 $ 4,393 Income taxes net of refunds $ 99,006 $ 103,261 $ 82,850 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS On January 3, 2017, our Board of Directors declared a regular quarterly cash dividend of $1.05 per share of Common and Class B common stock that was paid on January 31, 2017 to shareholders of record as of January 17, 2017. On January 24, 2017, we entered into an amendment to our credit agreement, which reduced the letter of credit subfacility from $50,000 to $10,000 and modified certain definitions. See Note 6. On February 13, 2017, we purchased an additional 10% ownership interest in Carrier Enterprise II for cash consideration of $42,688, following which we have an 80% controlling interest in Carrier Enterprise II. The source of cash was borrowings under our revolving credit agreement. See Note 9. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA | 12 Months Ended |
Dec. 31, 2016 | |
SELECTED QUARTERLY FINANCIAL DATA | WATSCO, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) 1st 2nd 3rd 4th Total Year Ended December 31, 2016 Revenues (1) $ 851,424 $ 1,214,435 $ 1,241,232 $ 913,611 $ 4,220,702 Gross profit $ 212,447 $ 291,861 $ 302,204 $ 228,072 $ 1,034,584 Net income attributable to Watsco, Inc. $ 25,537 $ 64,621 $ 63,099 $ 29,553 $ 182,810 Earnings per share for Common and Class B common stock (2): Basic $ 0.71 $ 1.82 $ 1.78 $ 0.81 $ 5.16 Diluted $ 0.71 $ 1.82 $ 1.78 $ 0.81 $ 5.15 Year Ended December 31, 2015 Revenues (1) $ 808,972 $ 1,223,439 $ 1,177,012 $ 903,816 $ 4,113,239 Gross profit $ 204,225 $ 295,245 $ 285,846 $ 222,041 $ 1,007,357 Net income attributable to Watsco, Inc. $ 23,048 $ 65,423 $ 57,968 $ 26,490 $ 172,929 Earnings per share for Common and Class B common stock (2): Basic $ 0.65 $ 1.86 $ 1.64 $ 0.75 $ 4.91 Diluted $ 0.65 $ 1.85 $ 1.64 $ 0.75 $ 4.90 (1) Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions. (2) Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation | Organization, Consolidation and Presentation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At December 31, 2016, we operated from 565 locations in 37 U.S. states, Canada, Mexico and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean. The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income. Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to self-insurance programs and the valuation of goodwill and indefinite lived intangible assets. While we believe that these estimates are reasonable, actual results could differ from such estimates. |
Cash Equivalents | Cash Equivalents All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2016 and 2015, the allowance for doubtful accounts totaled $6,169 and $5,305, respectively. |
Inventories | Inventories Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost or market using a weighted-average cost basis and the first-in, first-out |
Vendor Rebates | Vendor Rebates We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2016 and 2015, we had $9,926 and $8,086, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year. |
Marketable Securities | Marketable Securities Investments in marketable equity securities are classified as available-for-sale |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from 3-40 5-7 3-10 |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. Other intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and non-compete We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2016, there were no such events or circumstances. |
Fair Value Measurements | Fair Value Measurements We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy: Level 1 Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. |
Revenue Recognition | Revenue Recognition Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment and related parts and supplies and is recorded when shipment of products or delivery of services has occurred. Substantially all customer returns relate to products that are returned under warranty obligations underwritten by manufacturers, effectively mitigating our risk of loss for customer returns. Taxes collected from our customers and remitted to governmental authorities are presented in our consolidated statements of income on a net basis. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2016, 2015 and 2014, were $22,242, $21,150 and $19,754, respectively. |
Shipping and Handling | Shipping and Handling Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products is included in selling, general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $42,809, $41,345 and $43,324, respectively. |
Share-Based Compensation | Share-Based Compensation The fair value of stock option and non-vested paid-in |
Income Taxes | Income Taxes We record United States federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated United States federal income tax return. As income tax returns are generally not filed until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” |
Earnings per Share | Earnings per Share We compute earnings per share using the two-class two-class non-vested non-forfeitable two-class two-class Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period. |
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity We have used derivative instruments, including forward contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following: No Hedging Designation. Cash Flow Hedge. Fair Value Hedge. See Note 13 for additional information pertaining to derivative instruments. |
New Accounting Standards | New Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a standard on revenue recognition that provides a single, comprehensive revenue recognition model for all contracts with customers. The standard is principle-based and provides a five-step model to determine the measurement of revenue and timing of when it is recognized. This standard will be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption, which requires additional footnote disclosures. This standard is effective for our interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We will adopt this guidance on January 1, 2018. While we are currently evaluating the method of adoption and the impact of the provisions of this standard, we expect similar performance obligations to result under this guidance as compared with deliverables and separate units of accounting currently identified. As a result, we expect the timing of our revenue recognition to generally remain the same. Presentation of Debt Issuance Costs In April 2015, the FASB issued guidance that will require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, rather than as an asset. This guidance is effective retrospectively for interim and annual reporting periods beginning after December 15, 2015. The adoption of this guidance did not have an impact on our consolidated financial statements. Measurement of Inventory In July 2015, the FASB issued guidance that simplifies the measurement of inventory by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies to all inventory that is measured using first-in, first-out Classification of Deferred Taxes In November 2015, the FASB issued guidance that requires deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. This guidance can be applied either prospectively or retrospectively and will be effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact to our consolidated balance sheets. Leases In February 2016, the FASB issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. This guidance will be applied using a modified retrospective approach and is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. We will adopt this guidance on January 1, 2019. While we are still evaluating the impact of adopting this guidance on our consolidated financial statements, including the option to elect certain practical expedients, we expect that upon adoption the right-of-use Share-Based Payments In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The guidance requires that all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. The guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The guidance increases the amount companies can withhold to cover income taxes on awards without triggering liability classification for shares used to satisfy statutory income tax withholding obligations and requires application of a modified retrospective transition method. The amended guidance will be effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted if all provisions are adopted in the same period. We elected to early adopt the amended guidance during the quarter ended June 30, 2016, which required us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in Adoption of the amended guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in Quarter Ended March 31, 2016 As Reported As Adjusted Income Statement: Income taxes $ 15,508 $ 14,654 Net income $ 34,174 $ 35,028 Diluted earnings per share $ 0.71 $ 0.74 Diluted weighted-average common shares outstanding 32,537,225 32,546,314 Balance Sheet: Paid-in $ 610,285 $ 609,431 Cash Flow Statement: Net cash provided by operating activities $ 41,852 $ 42,706 Net cash used in financing activities $ (41,638 ) $ (42,492 ) |
Self-Insurance | Self-Insurance Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. Management reviews its assumptions with its independent third-party actuaries to evaluate whether the self-insurance reserves are adequate. If actual claims or adverse development of loss reserves occur and exceed these estimates, additional reserves may be required. Reserves in the amounts of $2,951 and $3,214 at December 31, 2016 and 2015, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Adoption of Amended Guidance Impact on Previously Reported Quarterly Results | Adoption of the amended guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in Quarter Ended March 31, 2016 As Reported As Adjusted Income Statement: Income taxes $ 15,508 $ 14,654 Net income $ 34,174 $ 35,028 Diluted earnings per share $ 0.71 $ 0.74 Diluted weighted-average common shares outstanding 32,537,225 32,546,314 Balance Sheet: Paid-in $ 610,285 $ 609,431 Cash Flow Statement: Net cash provided by operating activities $ 41,852 $ 42,706 Net cash used in financing activities $ (41,638 ) $ (42,492 ) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Basic and Diluted Earnings Per Common Share | The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Years Ended December 31, 2016 2015 2014 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 182,810 $ 172,929 $ 151,387 Less: distributed and undistributed earnings allocated to non-vested 14,806 13,634 11,444 Earnings allocated to Watsco, Inc. shareholders $ 168,004 $ 159,295 $ 139,943 Weighted-average common shares outstanding - Basic 32,582,385 32,435,961 32,308,073 Basic earnings per share for Common and Class B common stock $ 5.16 $ 4.91 $ 4.33 Allocation of earnings for Basic: Common stock $ 154,021 $ 146,037 $ 128,214 Class B common stock 13,983 13,258 11,729 $ 168,004 $ 159,295 $ 139,943 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 182,810 $ 172,929 $ 151,387 Less: distributed and undistributed earnings allocated to non-vested 14,801 13,626 11,435 Earnings allocated to Watsco, Inc. shareholders $ 168,009 $ 159,303 $ 139,952 Weighted-average common shares outstanding - Basic 32,582,385 32,435,961 32,308,073 Effect of dilutive stock options 34,119 44,395 50,781 Weighted-average common shares outstanding - Diluted 32,616,504 32,480,356 32,358,854 Diluted earnings per share for Common and Class B common stock $ 5.15 $ 4.90 $ 4.32 |
OTHER COMPREHENSIVE GAIN (LOS32
OTHER COMPREHENSIVE GAIN (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Gain (Loss) | The tax effects allocated to each component of other comprehensive loss were as follows: Years Ended December 31, 2016 2015 2014 Foreign currency translation adjustment $ 6,211 $ (39,378 ) $ (21,117 ) Unrealized (loss) gain on cash flow hedging instruments (1,321 ) 3,716 384 Income tax benefit (expense) 356 (1,003 ) (104 ) Unrealized (loss) gain on cash flow hedging instruments, net of tax (965 ) 2,713 280 Reclassification of loss (gain) on cash flow hedging instruments into earnings 442 (2,730 ) — Income tax (benefit) expense (119 ) 737 — Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax 323 (1,993 ) — Unrealized gain (loss) on available-for-sale 27 (12 ) 1 Income tax (expense) benefit (13 ) 4 — Unrealized gain (loss) on available-for-sale 14 (8 ) 1 Other comprehensive gain (loss) $ 5,583 $ (38,666 ) $ (20,836 ) |
Schedule of Accumulated Other Comprehensive Loss | The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Years Ended December 31, 2016 2015 2014 Foreign currency translation adjustment: Beginning balance $ (47,204 ) $ (23,623 ) $ (11,181 ) Current period other comprehensive gain (loss) 3,745 (23,581 ) (12,442 ) Ending balance (43,459 ) (47,204 ) (23,623 ) Cash flow hedging instruments: Beginning balance 600 168 — Current period other comprehensive (loss) income (579 ) 1,628 168 Less reclassification adjustment 194 (1,196 ) — Ending balance 215 600 168 Available-for-sale Beginning balance (300 ) (292 ) (293 ) Current period other comprehensive income (loss) 14 (8 ) 1 Ending balance (286 ) (300 ) (292 ) Accumulated other comprehensive loss, net of tax $ (43,530 ) $ (46,904 ) $ (23,747 ) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment, Net | Property and equipment, net, consists of: December 31, 2016 2015 Land $ 820 $ 820 Buildings and improvements 71,082 69,675 Machinery, vehicles and equipment 74,640 43,150 Furniture and fixtures 15,090 14,311 Computer hardware and software 42,515 38,876 204,147 166,832 Accumulated depreciation and amortization (113,645 ) (104,117 ) $ 90,502 $ 62,715 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Components of Income Tax Expense | The components of income tax expense from our wholly-owned operations and investments and our controlling interest in joint ventures with Carrier are as follows: Years Ended December 31, 2016 2015 2014 U.S. Federal $ 86,719 $ 85,585 $ 74,561 State 9,801 9,431 10,325 Foreign 9,416 9,661 6,953 $ 105,936 $ 104,677 $ 91,839 Current $ 103,216 $ 99,990 $ 91,550 Deferred 2,720 4,687 289 $ 105,936 $ 104,677 $ 91,839 |
Reconciliation of Effective Income Tax Rate | Following is a reconciliation of the effective income tax rate: Years Ended December 31, 2016 2015 2014 U.S. federal statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit and other 2.1 2.3 3.0 Excess tax benefits from share-based compensation (1.0 ) — — Tax effects on foreign income (0.1 ) (0.3 ) (1.0 ) Effective income tax rate attributable to Watsco, Inc. 36.0 37.0 37.0 Taxes attributable to non-controlling (5.0 ) (5.4 ) (6.4 ) Effective income tax rate 31.0 % 31.6 % 30.6 % |
Significant Components of Current and Long-Term Deferred Tax Assets and Liabilities | The following is a summary of the significant components of our current and long-term deferred tax assets and liabilities: December 31, 2016 2015 Current deferred tax assets: Capitalized inventory costs and inventory reserves $ 2,301 $ 1,794 Allowance for doubtful accounts 1,379 1,053 Self-insurance reserves 500 519 Other current deferred tax assets 1,778 1,921 Total current deferred tax assets (1) 5,958 5,287 Long-term deferred tax assets: Share-based compensation 26,239 23,603 Other long-term deferred tax assets 449 352 Net operating loss carryforwards 209 207 26,897 24,162 Valuation allowance — — Total long-term deferred tax assets (2) 26,897 24,162 Current deferred tax liabilities: Other current deferred tax liabilities (473 ) (686 ) Total current deferred tax liabilities (1) (473 ) (686 ) Long-term deferred tax liabilities: Deductible goodwill (88,581 ) (83,868 ) Depreciation (5,883 ) (3,774 ) Other long-term deferred tax liabilities (1,160 ) (1,533 ) Total long-term deferred tax liabilities (2) (95,624 ) (89,175 ) Net deferred tax liabilities $ (63,242 ) $ (60,412 ) (1) Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets. (2) Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. |
Changes in Gross Unrecognized Tax Benefits | The changes in gross unrecognized tax benefits are as follows: Balance at December 31, 2013 $ 3,135 Additions based on tax positions related to the current year 751 Reductions due to lapse of applicable statute of limitations (167 ) Balance at December 31, 2014 3,719 Additions based on tax positions related to the current year 871 Reductions due to lapse of applicable statute of limitations and tax assessments (1,077 ) Balance at December 31, 2015 3,513 Additions based on tax positions related to the current year 547 Reductions due to lapse of applicable statute of limitations (365 ) Balance at December 31, 2016 $ 3,695 |
SHARE-BASED COMPENSATION AND 35
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Stock Option Activity | The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2016: Options Weighted- Weighted- (in years) Aggregate Options outstanding at December 31, 2015 257,334 $ 102.96 Granted 107,000 140.41 Exercised (63,084 ) 71.18 Forfeited (7,000 ) 127.56 Options outstanding at December 31, 2016 294,250 $ 122.80 3.56 $ 7,451 Options exercisable at December 31, 2016 24,419 $ 109.81 2.92 $ 935 |
Summary of Non-Vested Restricted Stock Activity | The following is a summary of non-vested Shares Weighted- Non-vested 2,819,196 $ 49.99 Granted 183,144 130.01 Vested (77,450 ) 63.26 Forfeited (26,000 ) 112.79 Non-vested 2,898,890 $ 54.13 |
Valuation Assumptions Used for Stock Option Awards | The following table presents the weighted-average assumptions used for stock options granted: Years Ended December 31, 2016 2015 2014 Expected term in years 4.25 4.25 4.25 Risk-free interest rate 1.24 % 1.25 % 1.35 % Expected volatility 18.65 % 20.96 % 22.07 % Expected dividend yield 2.54 % 2.29 % 1.69 % Grant date fair value $ 16.37 $ 17.17 $ 15.75 |
Share-Based Compensation Expense | The following table provides information on share-based compensation expense: Years Ended December 31, 2016 2015 2014 Stock options $ 1,149 $ 952 $ 801 Non-vested 11,170 11,644 10,672 Share-based compensation expense $ 12,319 $ 12,596 $ 11,473 |
GOODWILL AND OTHER INTANGIBLE36
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows: Balance at December 31, 2014 $ 387,311 Foreign currency translation adjustment (9,001 ) Balance at December 31, 2015 378,310 Foreign currency translation adjustment 1,427 Balance at December 31, 2016 $ 379,737 |
Finite lived intangible assets | Other intangible assets are comprised of the following: December 31, Estimated Useful Lives 2016 2015 Indefinite lived intangible assets - Trade names, trademarks and distribution rights $ 120,288 $ 118,205 Finite lived intangible assets: Customer relationships 10-15 years 70,194 68,981 Trade name 10 years 1,150 1,150 Non-compete 7 years 369 369 Accumulated amortization (33,437 ) (28,224 ) Finite lived intangible assets, net 38,276 42,276 $ 158,564 $ 160,481 |
Indefinite Lived Intangible Assets | Other intangible assets are comprised of the following: December 31, Estimated Useful Lives 2016 2015 Indefinite lived intangible assets - Trade names, trademarks and distribution rights $ 120,288 $ 118,205 Finite lived intangible assets: Customer relationships 10-15 years 70,194 68,981 Trade name 10 years 1,150 1,150 Non-compete 7 years 369 369 Accumulated amortization (33,437 ) (28,224 ) Finite lived intangible assets, net 38,276 42,276 $ 158,564 $ 160,481 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges | The impact from foreign exchange derivative instruments designated as cash flow hedges were as follows: Years Ended December 31, 2016 2015 (Loss) gain recorded in accumulated other comprehensive loss $ (1,321 ) $ 3,716 Loss (gain) reclassified from accumulated other comprehensive loss into earnings $ 442 $ (2,730 ) |
Fair Value of Derivative Instruments and Location in the Balance Sheets | The following table summarizes the fair value of derivative instruments, which consist solely of foreign currency forward contracts, included in other current assets and accrued expenses and other current liabilities in our consolidated balance sheets. See Note 14. Asset Derivatives Liability Derivatives December 31, 2016 2015 2016 2015 Derivatives designated as hedging instruments $ 227 $ 923 $ 35 $ 3 Derivatives not designated as hedging instruments 14 326 4 4 Total derivative instruments $ 241 $ 1,249 $ 39 $ 7 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Available-for-sale Other assets $ 281 $ 281 — — Derivative financial instruments Other current assets $ 241 — $ 241 — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 39 — $ 39 — Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Available-for-sale Other assets $ 254 $ 254 — — Derivative financial instruments Other current assets $ 1,249 — $ 1,249 — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 7 — $ 7 — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Future Minimum Lease Payments under Non-Cancelable Operating Leases | At December 31, 2016, future minimum payments under non-cancelable 2017 $ 56,639 2018 48,420 2019 35,926 2020 21,650 2021 13,184 Thereafter 13,362 Total minimum payments $ 189,181 |
INFORMATION ABOUT GEOGRAPHIC 40
INFORMATION ABOUT GEOGRAPHIC AREAS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Revenues and Long-Lived Assets by Geographical Area | Our operations are primarily within the United States, including Puerto Rico, Canada and Mexico. Products are also sold from the United States on an export-only basis to portions of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographical area: Years Ended December 31, 2016 2015 2014 Revenues: United States $ 3,813,204 $ 3,710,977 $ 3,525,176 Canada 267,220 263,908 300,289 Mexico 140,278 138,354 119,075 Total revenues $ 4,220,702 $ 4,113,239 $ 3,944,540 December 31, 2016 2015 Long-Lived Assets: United States $ 467,728 $ 441,656 Canada 155,758 154,437 Mexico 5,317 5,413 Total long-lived assets $ 628,803 $ 601,506 |
SUPPLEMENTAL CASH FLOW INFORM41
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information | Supplemental cash flow information was as follows: Years Ended December 31, 2016 2015 2014 Interest paid $ 3,362 $ 4,993 $ 4,393 Income taxes net of refunds $ 99,006 $ 103,261 $ 82,850 |
SELECTED QUARTERLY FINANCIAL 42
SELECTED QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Selected Quarterly Financial Data | WATSCO, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) 1st 2nd 3rd 4th Total Year Ended December 31, 2016 Revenues (1) $ 851,424 $ 1,214,435 $ 1,241,232 $ 913,611 $ 4,220,702 Gross profit $ 212,447 $ 291,861 $ 302,204 $ 228,072 $ 1,034,584 Net income attributable to Watsco, Inc. $ 25,537 $ 64,621 $ 63,099 $ 29,553 $ 182,810 Earnings per share for Common and Class B common stock (2): Basic $ 0.71 $ 1.82 $ 1.78 $ 0.81 $ 5.16 Diluted $ 0.71 $ 1.82 $ 1.78 $ 0.81 $ 5.15 Year Ended December 31, 2015 Revenues (1) $ 808,972 $ 1,223,439 $ 1,177,012 $ 903,816 $ 4,113,239 Gross profit $ 204,225 $ 295,245 $ 285,846 $ 222,041 $ 1,007,357 Net income attributable to Watsco, Inc. $ 23,048 $ 65,423 $ 57,968 $ 26,490 $ 172,929 Earnings per share for Common and Class B common stock (2): Basic $ 0.65 $ 1.86 $ 1.64 $ 0.75 $ 4.91 Diluted $ 0.65 $ 1.85 $ 1.64 $ 0.75 $ 4.90 (1) Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions. (2) Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2016USD ($)EntityStateStore | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Significant Accounting Policies [Line Items] | |||
Number of joint ventures | Entity | 3 | ||
Allowance for doubtful accounts | $ 6,169,000 | $ 5,305,000 | |
Capitalized vendor rebates | 9,926,000 | 8,086,000 | |
Goodwill and other intangible assets impairment | 0 | 0 | $ 0 |
Advertising expense | 22,242,000 | 21,150,000 | 19,754,000 |
Shipping and handling costs | 42,809,000 | 41,345,000 | 43,324,000 |
Provision (benefit) for income taxes | 105,936,000 | $ 104,677,000 | $ 91,839,000 |
Adjustments for New Accounting Pronouncement | |||
Significant Accounting Policies [Line Items] | |||
Provision (benefit) for income taxes | $ (2,898,000) | ||
Minimum | Buildings and Improvements | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 3 years | ||
Minimum | Other Depreciable Assets | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 3 years | ||
Minimum | Furniture and fixtures | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 5 years | ||
Maximum | Buildings and Improvements | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 40 years | ||
Maximum | Other Depreciable Assets | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 10 years | ||
Maximum | Furniture and fixtures | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 7 years | ||
Watsco, Inc. | |||
Significant Accounting Policies [Line Items] | |||
Number of locations from which entity operates | Store | 565 | ||
Number of states in which entity operates | State | 37 |
Adoption of Amended Guidance Im
Adoption of Amended Guidance Impact on Previously Reported Quarterly Results (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||
Income Statement: | |||||||||||||||||||||
Income taxes | $ 105,936 | $ 104,677 | $ 91,839 | ||||||||||||||||||
Net income | $ 29,553 | $ 63,099 | $ 64,621 | $ 25,537 | $ 26,490 | $ 57,968 | $ 65,423 | $ 23,048 | $ 182,810 | $ 172,929 | $ 151,387 | ||||||||||
Diluted earnings per share | $ 0.81 | [1] | $ 1.78 | [1] | $ 1.82 | [1] | $ 0.71 | [1] | $ 0.75 | [1] | $ 1.64 | [1] | $ 1.85 | [1] | $ 0.65 | [1] | $ 5.15 | [1] | $ 4.90 | [1] | $ 4.32 |
Diluted weighted-average common shares outstanding | 32,616,504 | 32,480,356 | 32,358,854 | ||||||||||||||||||
Balance Sheet: | |||||||||||||||||||||
Paid-in capital | $ 592,350 | $ 602,522 | $ 592,350 | $ 602,522 | |||||||||||||||||
Cash Flow Statement: | |||||||||||||||||||||
Net cash provided by operating activities | 277,756 | 221,383 | $ 144,980 | ||||||||||||||||||
Net cash used in financing activities | $ (213,916) | $ (186,320) | $ (120,207) | ||||||||||||||||||
As Reported | |||||||||||||||||||||
Income Statement: | |||||||||||||||||||||
Income taxes | $ 15,508 | ||||||||||||||||||||
Net income | $ 34,174 | ||||||||||||||||||||
Diluted earnings per share | $ 0.71 | ||||||||||||||||||||
Diluted weighted-average common shares outstanding | 32,537,225 | ||||||||||||||||||||
Balance Sheet: | |||||||||||||||||||||
Paid-in capital | $ 610,285 | ||||||||||||||||||||
Cash Flow Statement: | |||||||||||||||||||||
Net cash provided by operating activities | 41,852 | ||||||||||||||||||||
Net cash used in financing activities | (41,638) | ||||||||||||||||||||
As Adjusted | |||||||||||||||||||||
Income Statement: | |||||||||||||||||||||
Income taxes | 14,654 | ||||||||||||||||||||
Net income | $ 35,028 | ||||||||||||||||||||
Diluted earnings per share | $ 0.74 | ||||||||||||||||||||
Diluted weighted-average common shares outstanding | 32,546,314 | ||||||||||||||||||||
Balance Sheet: | |||||||||||||||||||||
Paid-in capital | $ 609,431 | ||||||||||||||||||||
Cash Flow Statement: | |||||||||||||||||||||
Net cash provided by operating activities | 42,706 | ||||||||||||||||||||
Net cash used in financing activities | $ (42,492) | ||||||||||||||||||||
[1] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Schedule of Basic and Diluted E
Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Net income attributable to Watsco, Inc. shareholders | $ 29,553 | $ 63,099 | $ 64,621 | $ 25,537 | $ 26,490 | $ 57,968 | $ 65,423 | $ 23,048 | $ 182,810 | $ 172,929 | $ 151,387 | ||||||||||
Less: distributed and undistributed earnings allocated to non-vested restricted common stock | 14,806 | 13,634 | 11,444 | ||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 168,004 | $ 159,295 | $ 139,943 | ||||||||||||||||||
Weighted-average common shares outstanding - Basic | 32,582,385 | 32,435,961 | 32,308,073 | ||||||||||||||||||
Basic earnings per share for Common and Class B common stock | $ 0.81 | [1] | $ 1.78 | [1] | $ 1.82 | [1] | $ 0.71 | [1] | $ 0.75 | [1] | $ 1.64 | [1] | $ 1.86 | [1] | $ 0.65 | [1] | $ 5.16 | [1] | $ 4.91 | [1] | $ 4.33 |
Net income attributable to Watsco, Inc. shareholders | $ 29,553 | $ 63,099 | $ 64,621 | $ 25,537 | $ 26,490 | $ 57,968 | $ 65,423 | $ 23,048 | $ 182,810 | $ 172,929 | $ 151,387 | ||||||||||
Less: distributed and undistributed earnings allocated to non-vested restricted common stock | 14,801 | 13,626 | 11,435 | ||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Diluted | $ 168,009 | $ 159,303 | $ 139,952 | ||||||||||||||||||
Weighted-average common shares outstanding - Basic | 32,582,385 | 32,435,961 | 32,308,073 | ||||||||||||||||||
Effect of dilutive stock options | 34,119 | 44,395 | 50,781 | ||||||||||||||||||
Weighted-average common shares outstanding - Diluted | 32,616,504 | 32,480,356 | 32,358,854 | ||||||||||||||||||
Diluted earnings per share for Common and Class B common stock | $ 0.81 | [1] | $ 1.78 | [1] | $ 1.82 | [1] | $ 0.71 | [1] | $ 0.75 | [1] | $ 1.64 | [1] | $ 1.85 | [1] | $ 0.65 | [1] | $ 5.15 | [1] | $ 4.90 | [1] | $ 4.32 |
Common Stock | |||||||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 154,021 | $ 146,037 | $ 128,214 | ||||||||||||||||||
Class B Common Stock | |||||||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 13,983 | $ 13,258 | $ 11,729 | ||||||||||||||||||
[1] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Line Items] | |||
Convertible Class B common stock outstanding | 2,711,811 | 2,699,710 | 2,707,725 |
Anti-dilutive stock options excluded from earnings per share | 31,839 | 67,014 | 9,984 |
Schedule of Tax Effects Allocat
Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components Of Other Comprehensive Income Loss [Line Items] | |||
Foreign currency translation adjustment | $ 6,211 | $ (39,378) | $ (21,117) |
Unrealized (loss) gain on cash flow hedging instruments | (1,321) | 3,716 | 384 |
Income tax benefit (expense) | 356 | (1,003) | (104) |
Unrealized (loss) gain on cash flow hedging instruments, net of tax | (965) | 2,713 | 280 |
Reclassification of loss (gain) on cash flow hedging instruments into earnings | 442 | (2,730) | |
Income tax (benefit) expense | (119) | 737 | |
Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax | 323 | (1,993) | |
Unrealized gain (loss) on available-for-sale securities | 27 | (12) | 1 |
Income tax (expense) benefit | (13) | 4 | |
Unrealized gain (loss) on available-for-sale securities, net of tax | 14 | (8) | 1 |
Other comprehensive gain (loss) | $ 5,583 | $ (38,666) | $ (20,836) |
Schedule of Accumulated Other C
Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | $ (46,904) | $ (23,747) | |
Ending balance | (43,530) | (46,904) | $ (23,747) |
Foreign currency translation adjustment | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (47,204) | (23,623) | (11,181) |
Current period other comprehensive income (loss) | 3,745 | (23,581) | (12,442) |
Ending balance | (43,459) | (47,204) | (23,623) |
Cash flow hedging instruments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | 600 | 168 | |
Current period other comprehensive income (loss) | (579) | 1,628 | 168 |
Less reclassification adjustment | 194 | (1,196) | |
Ending balance | 215 | 600 | 168 |
Available-for-sale securities | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (300) | (292) | (293) |
Current period other comprehensive income (loss) | 14 | (8) | 1 |
Ending balance | $ (286) | $ (300) | $ (292) |
Supplier Concentration - Additi
Supplier Concentration - Additional Information (Detail) - Supplier Concentration Risk - Vendor | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration Risk [Line Items] | |||
Number of key suppliers | 10 | ||
Cost of Goods, Total | |||
Concentration Risk [Line Items] | |||
Percentage of purchases from key suppliers | 85.00% | 84.00% | 82.00% |
Carrier and Its Affiliates | Cost of Goods, Total | |||
Concentration Risk [Line Items] | |||
Percentage of purchases from key suppliers | 62.00% | 62.00% | 61.00% |
Property and Equipment, Net (De
Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 204,147 | $ 166,832 |
Accumulated depreciation and amortization | (113,645) | (104,117) |
Property and equipment, net | 90,502 | 62,715 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 820 | 820 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 71,082 | 69,675 |
Machinery, vehicles and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 74,640 | 43,150 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,090 | 14,311 |
Computer Hardware and Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 42,515 | $ 38,876 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization expense | $ 14,853 | $ 13,802 | $ 12,158 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 24, 2017 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Revolving credit agreement maximum borrowing capacity | $ 600,000 | ||
Revolving credit agreement maturity date | Jul. 1, 2019 | ||
Commitment fee percentage on unused portion of the commitment | 0.15% | ||
Borrowings under revolving credit agreement | $ 235,294 | $ 245,300 | |
Swingline Subfacility | |||
Debt Instrument [Line Items] | |||
Revolving credit agreement maximum borrowing capacity | 90,000 | ||
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Revolving credit agreement maximum borrowing capacity | 50,000 | ||
Letter of Credit | Subsequent Event | |||
Debt Instrument [Line Items] | |||
Revolving credit agreement maximum borrowing capacity | $ 10,000 | ||
Multicurrency borrowing sublimit | |||
Debt Instrument [Line Items] | |||
Revolving credit agreement maximum borrowing capacity | $ 75,000 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage on unused portion of the commitment | 0.125% | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage on unused portion of the commitment | 0.35% | ||
London Interbank Offer Rate | |||
Debt Instrument [Line Items] | |||
Basis spread | 1.00% | ||
London Interbank Offer Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread | 0.875% | ||
London Interbank Offer Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread | 2.50% | ||
Prime Rate | |||
Debt Instrument [Line Items] | |||
Basis spread | 0.00% | ||
Prime Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread | 0.00% | ||
Prime Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread | 1.50% |
Components of Income Tax Expens
Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components Of Income Tax Expense Benefit [Line Items] | |||
U.S. Federal | $ 86,719 | $ 85,585 | $ 74,561 |
State | 9,801 | 9,431 | 10,325 |
Foreign | 9,416 | 9,661 | 6,953 |
Income tax expense | 105,936 | 104,677 | 91,839 |
Current | 103,216 | 99,990 | 91,550 |
Deferred | 2,720 | 4,687 | 289 |
Income tax expense | $ 105,936 | $ 104,677 | $ 91,839 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | ||||
Percentage of income attributable to wholly-owned operations and investments for which income tax expense and effective tax rate calculated | 100.00% | |||
Undistributed earnings of foreign subsidiaries | $ 130,000 | |||
Valuation allowance | 0 | $ 0 | ||
Gross unrecognized tax benefits | 3,695 | 3,513 | $ 3,719 | $ 3,135 |
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | 2,573 | 2,416 | ||
Estimated accrued interest and penalties resulting from unrecognized tax benefits | $ 414 | $ 384 | ||
Minimum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2,017 | |||
Maximum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2,036 | |||
State and other | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards | $ 6,872 | |||
Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards | $ 0 |
Reconciliation of Effective Inc
Reconciliation of Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Effective Income Tax Rate [Line Items] | |||
U.S. federal statutory rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit and other | 2.10% | 2.30% | 3.00% |
Excess tax benefits from share-based compensation | (1.00%) | ||
Tax effects on foreign income | (0.10%) | (0.30%) | (1.00%) |
Effective income tax rate attributable to Watsco, Inc. | 36.00% | 37.00% | 37.00% |
Taxes attributable to non-controlling interest | (5.00%) | (5.40%) | (6.40%) |
Effective income tax rate | 31.00% | 31.60% | 30.60% |
Significant Components of Curre
Significant Components of Current and Long-Term Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
Components Of Deferred Income Tax Assets And Liabilities [Line Items] | |||
Capitalized inventory costs and inventory reserves | $ 2,301 | $ 1,794 | |
Allowance for doubtful accounts | 1,379 | 1,053 | |
Self-insurance reserves | 500 | 519 | |
Other current deferred tax assets | 1,778 | 1,921 | |
Total current deferred tax assets | [1] | 5,958 | 5,287 |
Share-based compensation | 26,239 | 23,603 | |
Other long-term deferred tax assets | 449 | 352 | |
Net operating loss carryforwards | 209 | 207 | |
Total long-term deferred tax assets | 26,897 | 24,162 | |
Valuation allowance | 0 | 0 | |
Total long-term deferred tax assets | [2] | 26,897 | 24,162 |
Other current deferred tax liabilities | (473) | (686) | |
Total current deferred tax liabilities | [1] | (473) | (686) |
Deductible goodwill | (88,581) | (83,868) | |
Depreciation | (5,883) | (3,774) | |
Other long-term deferred tax liabilities | (1,160) | (1,533) | |
Total long-term deferred tax liabilities | [2] | (95,624) | (89,175) |
Net deferred tax liabilities | $ (63,242) | $ (60,412) | |
[1] | Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets. | ||
[2] | Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. |
Changes in Gross Unrecognized T
Changes in Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Contingency [Line Items] | |||
Beginning balance | $ 3,513 | $ 3,719 | $ 3,135 |
Additions based on tax positions related to the current year | 547 | 871 | 751 |
Reductions due to lapse of applicable statute of limitations | (365) | (1,077) | (167) |
Ending balance | $ 3,695 | $ 3,513 | $ 3,719 |
Share-Based Compensation and 58
Share-Based Compensation and Benefit Plans - Additional Information (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)Age$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options of common stock outstanding | 294,250 | 257,334 | |
Total intrinsic value of stock options exercised | $ | $ 4,490 | $ 7,525 | $ 3,746 |
Cash received from Common stock issued | $ | 4,447 | 4,850 | 3,324 |
Common stock contribution to 401(k) plan | $ | $ 2,348 | $ 1,963 | $ 1,759 |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate shares of common stock that may be granted | 1,500,000 | ||
Shares reserved for future grant | 496,160 | ||
Number of days under which shares to be purchased by employee on such available | 90 days | ||
Discount allowed to employees to purchase share | 5.00% | ||
Shares purchased under ESPP | 5,956 | 6,463 | 6,995 |
Average price of the shares purchased by employees | $ / shares | $ 125.84 | $ 112.53 | $ 90.89 |
Additional shares issued resulting from cash dividends reinvested in common stock | 3,442 | 3,183 | 2,953 |
Net proceeds from shares purchased under ESPP | $ | $ 1,206 | $ 1,107 | $ 921 |
2014 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percent of market price that share-based compensation awards are granted at | 100.00% | ||
Aggregate shares of common stock that may be granted | 2,000,000 | ||
Shares reserved for future grant | 1,424,848 | ||
Contractual term of stock option awards | 5 years | ||
2014 Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 2 years | ||
2014 Plan | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 4 years | ||
2014 Plan | Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares awarded under plan | 293,950 | ||
2014 Plan | Common and Class B Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares reserved for future grant | 45,421 | ||
2014 Plan | Class B Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares awarded under plan | 326,623 | ||
401(k) Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock contribution to 401(k) Plan, shares | 20,045 | 18,343 | 18,309 |
Common stock contribution to 401(k) plan | $ | $ 2,348 | $ 1,963 | $ 1,759 |
2001 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate shares of common stock that may be granted | 0 | ||
Contractual term of stock option awards | 5 years | ||
Options of common stock outstanding | 37,750 | ||
2001 Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 2 years | ||
2001 Plan | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 4 years | ||
Non-Vested Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant date fair value of non-vested (restricted) stock | $ / shares | $ 130.01 | $ 114.55 | $ 96.84 |
Fair value of non-vested stock that vested | $ | $ 10,096 | $ 2,468 | $ 5,789 |
Shares withheld as payment for tax withholdings related to share based compensation, shares | 7,206 | 21,028 | |
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ | $ 889 | $ 2,125 | |
Unrecognized share-based compensation expense | $ | $ 100,397 | ||
Weighted-average period for recognition of share-based compensation expense, in years | 11 years | ||
Non-Vested Restricted Stock | Chief Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ | $ 59,000 | ||
Weighted-average period for recognition of share-based compensation expense, in years | 10 years | ||
Shares of non-vested (restricted) stock obligated to issue in connection with incentive compensation agreements | 67,853 | ||
Non-Vested Restricted Stock | Chief Executive Officer | Share-based Compensation Award, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ | $ 13,000 | ||
Weighted-average period for recognition of share-based compensation expense, in years | 6 years | ||
Age of Chief Executive Officer when non-vested (restricted) stock vests | Age | 82 | ||
Non-Vested Restricted Stock | Chief Executive Officer | Share-based Compensation Award, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ | $ 46,000 | ||
Weighted-average period for recognition of share-based compensation expense, in years | 10 years | ||
Age of Chief Executive Officer when non-vested (restricted) stock vests | Age | 86 | ||
Non-Vested Restricted Stock | Employee [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Age of employee when non-vested (restricted) stock vests | Age | 62 | ||
Non-Vested Restricted Stock | President [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average period for recognition of share-based compensation expense, in years | 27 years | ||
Shares of non-vested (restricted) stock obligated to issue in connection with incentive compensation agreements | 25,774 | ||
Non-Vested Restricted Stock | Common and Class B Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares withheld as payment for tax withholdings related to share based compensation, shares | 30,413 | ||
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ | $ 3,967 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ | $ 2,096 | ||
Weighted-average period for recognition of share-based compensation expense, in years | 1 year 9 months 18 days | ||
Fair value of stock options vested | $ | $ 736 | $ 856 | $ 1,145 |
Stock Options | Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares withheld as payment for tax withholdings related to share based compensation, shares | 348 | 26,006 | 5,454 |
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ | $ 51 | $ 3,251 | $ 490 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Outstanding beginning balance | shares | 257,334 |
Options, Granted | shares | 107,000 |
Options, Exercised | shares | (63,084) |
Options, Forfeited | shares | (7,000) |
Options, Outstanding ending balance | shares | 294,250 |
Options, Exercisable | shares | 24,419 |
Weighted-Average Exercise Price, Outstanding beginning balance | $ / shares | $ 102.96 |
Weighted-Average Exercise Price, Granted | $ / shares | 140.41 |
Weighted-Average Exercise Price, Exercised | $ / shares | 71.18 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 127.56 |
Weighted-Average Exercise Price, Outstanding ending balance | $ / shares | 122.80 |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 109.81 |
Weighted-Average Remaining Contractual Term (in years), Outstanding | 3 years 6 months 22 days |
Weighted-Average Remaining Contractual Term (in years), Exercisable | 2 years 11 months 1 day |
Aggregate Intrinsic Value, Outstanding | $ | $ 7,451 |
Aggregate Intrinsic Value, Exercisable | $ | $ 935 |
Summary of Non-Vested Restricte
Summary of Non-Vested Restricted Stock Activity (Detail) - Non-Vested Restricted Stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares, Non-vested beginning balance | 2,819,196 | ||
Shares, Granted | 183,144 | ||
Shares, Vested | (77,450) | ||
Shares, Forfeited | (26,000) | ||
Shares, Non-vested ending balance | 2,898,890 | 2,819,196 | |
Weighted-Average Grant Date Fair Value, Non-vested beginning balance | $ 49.99 | ||
Weighted-Average Grant Date Fair Value, Granted | 130.01 | $ 114.55 | $ 96.84 |
Weighted-Average Grant Date Fair Value, Vested | 63.26 | ||
Weighted-Average Grant Date Fair Value, Forfeited | 112.79 | ||
Weighted-Average Grant Date Fair Value, Non-vested ending balance | $ 54.13 | $ 49.99 |
Weighted-Average Assumptions Us
Weighted-Average Assumptions Used for Stock Options Granted (Detail) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 4 years 3 months | 4 years 3 months | 4 years 3 months |
Risk-free interest rate | 1.24% | 1.25% | 1.35% |
Expected volatility | 18.65% | 20.96% | 22.07% |
Expected dividend yield | 2.54% | 2.29% | 1.69% |
Grant date fair value | $ 16.37 | $ 17.17 | $ 15.75 |
Share-Based Compensation Expens
Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 12,319 | $ 12,596 | $ 11,473 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 1,149 | 952 | 801 |
Non-Vested Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 11,170 | $ 11,644 | $ 10,672 |
Purchase of Additional Owners63
Purchase of Additional Ownership Interest in Joint Ventures - Additional Information (Detail) - USD ($) $ in Thousands | Feb. 13, 2017 | Nov. 29, 2016 | Jul. 01, 2014 |
Carrier Enterprise II | |||
Business Acquisition [Line Items] | |||
Additional ownership interest acquired | 10.00% | ||
Cash consideration | $ 42,909 | ||
Carrier Enterprise II | Subsequent Event | |||
Business Acquisition [Line Items] | |||
Additional ownership interest acquired | 10.00% | ||
Cash consideration | $ 42,688 | ||
Controlling interest, ownership percentage | 80.00% | ||
Carrier Enterprise I | |||
Business Acquisition [Line Items] | |||
Additional ownership interest acquired | 10.00% | ||
Cash consideration | $ 87,735 | ||
Controlling interest, ownership percentage | 80.00% |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | $ 378,310 | $ 387,311 |
Foreign currency translation adjustment | 1,427 | (9,001) |
Goodwill, Ending Balance | $ 379,737 | $ 378,310 |
Other Intangible Assets (Detail
Other Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets [Line Items] | ||
Indefinite lived intangible assets - Trade names, trademarks and distribution rights | $ 120,288 | $ 118,205 |
Finite lived intangible assets: | ||
Accumulated amortization | (33,437) | (28,224) |
Finite lived intangible assets, net | 38,276 | 42,276 |
Intangible assets, net | 158,564 | 160,481 |
Customer Relationships | ||
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 70,194 | 68,981 |
Customer Relationships | Minimum | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 10 years | |
Customer Relationships | Maximum | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 15 years | |
Trade Name | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 10 years | |
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 1,150 | 1,150 |
Noncompete Agreements | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 7 years | |
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 369 | $ 369 |
Goodwill and Other Intangible66
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill And Intangible Assets [Line Items] | |||
Amortization expense related to finite lived intangible assets | $ 5,213 | $ 5,315 | $ 5,769 |
Amortization of finite lived intangible assets for 2017 | 5,200 | ||
Amortization of finite lived intangible assets for 2018 | 5,200 | ||
Amortization of finite lived intangible assets for 2019 | 5,200 | ||
Amortization of finite lived intangible assets for 2020 | 5,200 | ||
Amortization of finite lived intangible assets for 2021 | $ 4,300 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 1999 | |
Stockholders Equity Note [Line Items] | ||||
Preferred stock outstanding | 0 | 0 | ||
Number of shares authorized to be repurchased | 7,500,000 | |||
Treasury stock, shares repurchased | 0 | 0 | 0 | |
Cost of repurchased shares | $ 114,425 | $ 114,425 | ||
Remaining number of shares authorized to be repurchased | 1,129,087 | |||
Common Stock | ||||
Stockholders Equity Note [Line Items] | ||||
Amount of votes common stock is entitled | One | |||
Percentage of Board entitled to elect | 25.00% | |||
Treasury stock, shares | 6,322,650 | 6,322,650 | ||
Class B Common Stock | ||||
Stockholders Equity Note [Line Items] | ||||
Amount of votes common stock is entitled | Ten | |||
Treasury stock, shares | 48,263 | 48,263 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Financial Instrument [Line Items] | ||
Estimated fair value of contingent liability | $ 0 | |
Standby Letters of Credit | ||
Financial Instrument [Line Items] | ||
Fair value of contingent liability | 2,430,000 | $ 2,690,000 |
Performance Bonds | ||
Financial Instrument [Line Items] | ||
Fair value of contingent liability | $ 8,000,000 | $ 4,000,000 |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - Foreign Currency Forward Contracts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivatives not Designated as Hedging Instruments | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional value of derivatives | $ 4,650 | ||
Contract expiring terms | 2017-03 | ||
(Losses) gains from foreign currency forward contracts not designated as hedging instruments | $ (306) | $ 2,552 | $ 142 |
Cash Flow Hedge | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional value of derivatives | $ 33,200 | ||
Contract maturity period | One year or less | ||
Contract expiring terms | 2017-09 | ||
Pre-tax gain to be reclassified into earnings within the next 12 months | $ 490 |
Impact from Foreign Exchange De
Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - Cash Flow Hedge - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) gain recorded in accumulated other comprehensive loss | $ (1,321) | $ 3,716 |
Loss (gain) reclassified from accumulated other comprehensive loss into earnings | $ 442 | $ (2,730) |
Fair Value of Derivative Instru
Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Currency Forward Contracts - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | $ 241 | $ 1,249 |
Derivative instruments, liabilities derivatives | 39 | 7 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | 227 | 923 |
Derivative instruments, liabilities derivatives | 35 | 3 |
Derivatives not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | 14 | 326 |
Derivative instruments, liabilities derivatives | $ 4 | $ 4 |
Assets and Liabilities Carried
Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Other assets | ||
Assets: | ||
Available-for-sale securities | $ 281 | $ 254 |
Other Current Assets | ||
Assets: | ||
Derivative financial instruments | 241 | 1,249 |
Accrued expenses and other current liabilities | ||
Liabilities: | ||
Derivative financial instruments | 39 | 7 |
Fair Value Measurements, Level 1 | Other assets | ||
Assets: | ||
Available-for-sale securities | 281 | 254 |
Fair Value Measurements, Level 2 | Other Current Assets | ||
Assets: | ||
Derivative financial instruments | 241 | 1,249 |
Fair Value Measurements, Level 2 | Accrued expenses and other current liabilities | ||
Liabilities: | ||
Derivative financial instruments | $ 39 | $ 7 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Line Items] | |||
Self-insurance reserves | $ 2,951 | $ 3,214 | |
Maximum exposure to loss related to involvement with variable interest entity | $ 4,300 | ||
Operating leases maximum maturity date | 2,025 | ||
Rental expense | $ 83,260 | $ 82,581 | $ 81,155 |
Carrier and Its Affiliates | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Non-cancelable purchase obligations for goods | 29,000 | ||
Key Suppliers | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Non-cancelable purchase obligations for goods | $ 17,000 |
Future Minimum Leases Payments
Future Minimum Leases Payments under Non-Cancelable Operating Leases (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Operating Leases Future Minimum Payments Due [Line Items] | |
2,017 | $ 56,639 |
2,018 | 48,420 |
2,019 | 35,926 |
2,020 | 21,650 |
2,021 | 13,184 |
Thereafter | 13,362 |
Total minimum payments | $ 189,181 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplier Concentration Risk | Cost of Goods, Total | |||
Related Party Transaction [Line Items] | |||
Percentage of purchases from key suppliers | 85.00% | 84.00% | 82.00% |
Carrier and Its Affiliates | Supplier Concentration Risk | |||
Related Party Transaction [Line Items] | |||
Amount payable to Carrier and its affiliates, net of receivables | $ 63,000 | $ 85,000 | |
Revenues from sales to Carrier and its affiliates | $ 56,000 | $ 62,000 | $ 38,000 |
Carrier and Its Affiliates | Supplier Concentration Risk | Cost of Goods, Total | |||
Related Party Transaction [Line Items] | |||
Percentage of purchases from key suppliers | 62.00% | 62.00% | 61.00% |
Moss & Associates LLC | Customary Payments for Remodeling of Corporate Headquarters | |||
Related Party Transaction [Line Items] | |||
Payment for related party transaction | $ 291 | ||
Payable for related party transaction | $ 109 |
Revenues and Long-Lived Assets
Revenues and Long-Lived Assets by Geographical Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | $ 913,611 | [1] | $ 1,241,232 | $ 1,214,435 | $ 851,424 | $ 903,816 | [1] | $ 1,177,012 | $ 1,223,439 | $ 808,972 | $ 4,220,702 | [1] | $ 4,113,239 | [1] | $ 3,944,540 | ||||||
Long-Lived Assets | 628,803 | 601,506 | 628,803 | 601,506 | |||||||||||||||||
UNITED STATES | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 3,813,204 | 3,710,977 | 3,525,176 | ||||||||||||||||||
Long-Lived Assets | 467,728 | 441,656 | 467,728 | 441,656 | |||||||||||||||||
CANADA | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 267,220 | 263,908 | 300,289 | ||||||||||||||||||
Long-Lived Assets | 155,758 | 154,437 | 155,758 | 154,437 | |||||||||||||||||
MEXICO | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 140,278 | 138,354 | $ 119,075 | ||||||||||||||||||
Long-Lived Assets | $ 5,317 | $ 5,413 | $ 5,317 | $ 5,413 | |||||||||||||||||
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions. |
Supplemental Cash Flow Inform77
Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flow Supplemental Disclosures [Line Items] | |||
Interest paid | $ 3,362 | $ 4,993 | $ 4,393 |
Income taxes net of refunds | $ 99,006 | $ 103,261 | $ 82,850 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Feb. 13, 2017 | Jan. 03, 2017 | Nov. 29, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jan. 24, 2017 |
Subsequent Event [Line Items] | |||||||
Cash dividend | $ 3.60 | $ 2.80 | $ 2 | ||||
Revolving credit agreement maximum borrowing capacity | $ 600,000 | ||||||
Carrier Enterprise II | |||||||
Subsequent Event [Line Items] | |||||||
Additional ownership interest acquired | 10.00% | ||||||
Cash consideration | $ 42,909 | ||||||
Carrier Enterprise II | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Additional ownership interest acquired | 10.00% | ||||||
Cash consideration | $ 42,688 | ||||||
Controlling interest, ownership percentage | 80.00% | ||||||
Letter of Credit | |||||||
Subsequent Event [Line Items] | |||||||
Revolving credit agreement maximum borrowing capacity | $ 50,000 | ||||||
Letter of Credit | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Revolving credit agreement maximum borrowing capacity | $ 10,000 | ||||||
Common Stock | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividend | $ 1.05 | ||||||
Dividends, date declared | Jan. 3, 2017 | ||||||
Dividends, payable date | Jan. 31, 2017 | ||||||
Dividends, date of record | Jan. 17, 2017 | ||||||
Class B Common Stock | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividend | $ 1.05 | ||||||
Dividends, date declared | Jan. 3, 2017 | ||||||
Dividends, payable date | Jan. 31, 2017 | ||||||
Dividends, date of record | Jan. 17, 2017 |
Selected Quarterly Financial 79
Selected Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||
Quarterly Financial Data [Line Items] | |||||||||||||||||||||
Revenues | $ 913,611 | [1] | $ 1,241,232 | [1] | $ 1,214,435 | [1] | $ 851,424 | [1] | $ 903,816 | [1] | $ 1,177,012 | [1] | $ 1,223,439 | [1] | $ 808,972 | [1] | $ 4,220,702 | [1] | $ 4,113,239 | [1] | $ 3,944,540 |
Gross profit | 228,072 | 302,204 | 291,861 | 212,447 | 222,041 | 285,846 | 295,245 | 204,225 | 1,034,584 | 1,007,357 | 956,402 | ||||||||||
Net income attributable to Watsco, Inc. | $ 29,553 | $ 63,099 | $ 64,621 | $ 25,537 | $ 26,490 | $ 57,968 | $ 65,423 | $ 23,048 | $ 182,810 | $ 172,929 | $ 151,387 | ||||||||||
Earnings per share for Common and Class B common stock: | |||||||||||||||||||||
Basic | $ 0.81 | [2] | $ 1.78 | [2] | $ 1.82 | [2] | $ 0.71 | [2] | $ 0.75 | [2] | $ 1.64 | [2] | $ 1.86 | [2] | $ 0.65 | [2] | $ 5.16 | [2] | $ 4.91 | [2] | $ 4.33 |
Diluted | $ 0.81 | [2] | $ 1.78 | [2] | $ 1.82 | [2] | $ 0.71 | [2] | $ 0.75 | [2] | $ 1.64 | [2] | $ 1.85 | [2] | $ 0.65 | [2] | $ 5.15 | [2] | $ 4.90 | [2] | $ 4.32 |
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions. | ||||||||||||||||||||
[2] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |